| þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Colorado | 33-0344842 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
| (Do not check if a smaller reporting company) | ||||||
| Page | ||||||||
| 1 | ||||||||
| 1 | ||||||||
| 2 | ||||||||
| 3 | ||||||||
| 4 | ||||||||
| 6 | ||||||||
| 7 | ||||||||
| 14 | ||||||||
| 17 | ||||||||
| 17 | ||||||||
| 17 | ||||||||
| 17 | ||||||||
| 17 | ||||||||
| 17 | ||||||||
| 17 | ||||||||
| 18 | ||||||||
| 18 | ||||||||
| 18 | ||||||||
| 19 | ||||||||
| EX-31.1 Section 302 Certification of CEO | ||||||||
| EX-31.2 Section 302 Certification of CFO | ||||||||
| EX-32.1 Section 906 Certification of CEO | ||||||||
| EX-32.2 Section 906 Certification of CFO | ||||||||
1
| June 30, | December 31, | |||||||
| 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | — | $ | 21,879 | ||||
Total current assets |
— | 21,879 | ||||||
Total assets |
$ | — | $ | 21,879 | ||||
Liabilities and Stockholders’ Equity (Deficit) |
||||||||
Current liabilities |
||||||||
Accounts payable and accrued expenses |
$ | — | $ | 3,285 | ||||
Total current liabilities |
— | 3,285 | ||||||
Stockholders’ Equity (Deficit) |
||||||||
Preferred stock, $0.0001 par value; 2,000,000 shares
authorized; no shares issued or outstanding |
— | — | ||||||
Common stock, $0.0001 par value; 250,000,000 shares
authorized; 79,302,460 shares issued and outstanding |
7,930 | 7,930 | ||||||
Additional paid-in capital |
1,484,446 | 1,484,446 | ||||||
(Deficit) accumulated during the development stage |
(1,492,376 | ) | (1,473,782 | ) | ||||
Total stockholders’ equity (deficit) |
— | 18,594 | ||||||
Total liabilities and stockholders’ equity (deficit) |
$ | — | $ | 21,879 | ||||
2
| Cumulative Period | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | From January 26, | ||||||||||||||||||
| June 30, | June 30, | 1989 (Inception) | ||||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | To June 30, 2008 | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
Revenue |
$ | — | $ | — | $ | — | $ | — | $ | 269 | ||||||||||
Operating Expenses |
||||||||||||||||||||
Consulting and professional fees |
5,194 | 12,499 | 18,354 | 219,974 | 738,276 | |||||||||||||||
Depreciation and amortization |
— | — | — | — | 53,516 | |||||||||||||||
Research and development |
— | — | — | — | 470,932 | |||||||||||||||
General and administrative |
240 | 121 | 240 | 2,593 | 506,067 | |||||||||||||||
Total operating expenses |
5,434 | 12,620 | 18,594 | 222,567 | 1,768,791 | |||||||||||||||
Loss from operations |
(5,434 | ) | (12,620 | ) | (18,594 | ) | (222,567 | ) | (1,768,522 | ) | ||||||||||
Other income (expense) |
||||||||||||||||||||
Interest income |
— | — | — | 4 | 8,033 | |||||||||||||||
Interest (expense) |
— | — | — | — | (9,918 | ) | ||||||||||||||
Other income |
— | — | — | — | 308,031 | |||||||||||||||
Other (expense) (Note 3) |
— | — | — | (30,000 | ) | (30,000 | ) | |||||||||||||
Net (loss) |
$ | (5,434 | ) | $ | (12,620 | ) | $ | (18,594 | ) | $ | (252,563 | ) | $ | (1,492,376 | ) | |||||
Net (loss) per share — basic
and diluted |
NIL | NIL | NIL | $ | (.005 | ) | ||||||||||||||
Weighted average number of
shares of outstanding -
basic and diluted |
79,302,460 | 79,302,460 | 79,302,460 | 49,416,825 | ||||||||||||||||
3
| Deficit | ||||||||||||||||||||
| Accumulated | ||||||||||||||||||||
| Additional | during the | Total | ||||||||||||||||||
| Common Stock | Paid-In | Development | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Stage | Equity (Deficit) | ||||||||||||||||
Balances at January 26, 1989 |
— | $ | — | $ | — | $ | — | $ | — | |||||||||||
Issuance of common stock to founders |
2,775,000 | 278 | (278 | ) | — | — | ||||||||||||||
Issuance of common stock for cash |
3,275,000 | 328 | 255,693 | — | 256,020 | |||||||||||||||
Issuance of common stock for services |
150,000 | 15 | 14,985 | — | 15,000 | |||||||||||||||
Issuance of common stock for warrants |
— | — | 100 | — | 100 | |||||||||||||||
Net (loss) |
— | — | — | (74,393 | ) | (74,393 | ) | |||||||||||||
Balances at December 31, 1989 |
6,200,000 | $ | 620 | $ | 270,500 | $ | (74,393 | ) | $ | 196,727 | ||||||||||
Issuance of common stock for
employment |
220,000 | 22 | 98,978 | — | 99,000 | |||||||||||||||
Warrants exercised |
177,500 | 18 | 70,188 | — | 70,206 | |||||||||||||||
Net (loss) |
— | — | — | (424,063 | ) | (424,063 | ) | |||||||||||||
Balances at December 31, 1990 |
6,597,500 | $ | 660 | $ | 439,666 | $ | (498,456 | ) | $ | (58,130 | ) | |||||||||
Warrants exercised |
307,500 | 31 | 122,969 | — | 123,000 | |||||||||||||||
Issuance of common stock for
employment |
90,000 | 9 | 45,991 | — | 46,000 | |||||||||||||||
Issuance of common stock for cash |
107,460 | 11 | 122,039 | — | 122,050 | |||||||||||||||
Net (loss) |
— | — | — | (531,532 | ) | (531,532 | ) | |||||||||||||
Balances at December 31, 1991 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,029,988 | ) | $ | (298,612 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 1992 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,030,751 | ) | $ | (299,375 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 1993 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,031,514 | ) | $ | (300,138 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 1994 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,032,277 | ) | $ | (300,901 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 1995 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,033,040 | ) | $ | (301,664 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 1996 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,033,803 | ) | $ | (302,427 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 1997 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,034,566 | ) | $ | (303,190 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 1998 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,035,329 | ) | $ | (303,953 | ) | |||||||||
4
| Deficit | ||||||||||||||||||||
| Accumulated | ||||||||||||||||||||
| Additional | during the | Total | ||||||||||||||||||
| Common Stock | Paid-In | Development | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Stage | Equity (Deficit) | ||||||||||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 2000 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,036,855 | ) | $ | (305,479 | ) | |||||||||
Net (loss) |
— | — | — | (20,763 | ) | (20,763 | ) | |||||||||||||
Balances at December 31, 2001 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,057,618 | ) | $ | (326,242 | ) | |||||||||
Net (loss) |
— | — | — | (12,763 | ) | (12,763 | ) | |||||||||||||
Balances at December 31, 2002 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,070,381 | ) | $ | (339,005 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 2003 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,071,144 | ) | $ | (339,768 | ) | |||||||||
Net (loss) |
— | — | — | (763 | ) | (763 | ) | |||||||||||||
Balances at December 31, 2004 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,071,907 | ) | $ | (340,531 | ) | |||||||||
Net (loss) |
— | — | — | 308,031 | 308,031 | |||||||||||||||
Balances at December 31, 2005 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (763,876 | ) | $ | (32,500 | ) | |||||||||
Net (loss) |
— | — | — | (439,285 | ) | (439,285 | ) | |||||||||||||
Balances at December 31, 2006 |
7,102,460 | $ | 710 | $ | 730,666 | $ | (1,203,161 | ) | $ | (471,785 | ) | |||||||||
Issuance of common stock for cash on
January 31, 2007 |
7,500,000 | 750 | 14,250 | — | 15,000 | |||||||||||||||
Return and cancellation of common
stock on March 21, 2007 |
(9,900,000 | ) | (990 | ) | 990 | — | — | |||||||||||||
Issuance of common stock for cash on
March 21, 2007 |
60,000,000 | 6,000 | 594,000 | — | 600,000 | |||||||||||||||
Issuance of common stock for cash on
March 26, 2007 |
7,500,000 | 750 | 74,250 | — | 75,000 | |||||||||||||||
Issuance of common stock for
services on March 26, 2007 |
7,100,000 | 710 | 70,290 | — | 71,000 | |||||||||||||||
Net (loss) |
— | — | — | (270,621 | ) | (270,621 | ) | |||||||||||||
Balances at December 31, 2007 |
79,302,460 | $ | 7,930 | $ | 1,484,446 | $ | (1,473,782 | ) | $ | 18,594 | ||||||||||
Net (loss) |
— | — | — | (18,594 | ) | (18,594 | ) | |||||||||||||
Balances at June 30, 2008 |
79,302,460 | $ | 7,930 | $ | 1,484,446 | $ | (1,492,376 | ) | $ | — | ||||||||||
5
| Cumulative | ||||||||||||
| Period From | ||||||||||||
| January 26, 1989 | ||||||||||||
| Six Months Ended | (Inception) To | |||||||||||
| June 30, | June 30, 2008 | |||||||||||
| 2008 | 2007 | June 30, 2008 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Cash Flows From Operating Activities |
||||||||||||
Net (loss) |
$ | (18,594 | ) | $ | (252,563 | ) | $ | (1,492,376 | ) | |||
Adjustments to reconcile net (loss) to net cash
(used in) operating activities: |
||||||||||||
Common stock issued for services |
— | 71,000 | 231,100 | |||||||||
Depreciation and amortization |
— | — | 53,516 | |||||||||
Write down of computer software |
— | — | 173,358 | |||||||||
Changes in operating assets and liabilities: |
||||||||||||
Restricted cash |
— | (10,398 | ) | |||||||||
Accounts payable and accrued expenses |
(3,285 | ) | (455,285 | ) | — | |||||||
Net cash provided by (used in) operating
activities |
(21,879 | ) | (647,246 | ) | (1,034,402 | ) | ||||||
Cash Flows From Investing Activities |
||||||||||||
Purchase of property and equipment |
— | — | (52,516 | ) | ||||||||
Increase in computer software |
— | — | (173,359 | ) | ||||||||
Organizational costs |
— | — | (1,000 | ) | ||||||||
Net cash (used in) investing activities |
— | — | (226,875 | ) | ||||||||
Cash Flows From Financing Activities |
||||||||||||
Proceeds from borrowings on notes payable |
— | — | 9,537 | |||||||||
Write off of notes payable |
— | — | (9,537 | ) | ||||||||
Proceeds from issuance of common stock |
— | 690,000 | 1,261,277 | |||||||||
Net cash provided by financing activities |
— | 690,000 | 1,261,277 | |||||||||
Net increase (decrease) in cash and cash equivalents |
(21,879 | ) | 42,754 | — | ||||||||
Cash and cash equivalents, beginning of period |
21,879 | — | — | |||||||||
Cash and cash equivalents, end of period |
$ | — | $ | 42,754 | $ | — | ||||||
Supplemental Disclosure of Cash Flow Information |
||||||||||||
Cash paid for interest |
$ | — | $ | — | $ | — | ||||||
Cash paid for income taxes |
$ | — | $ | — | $ | — | ||||||
Supplemental Disclosure of Non-Cash Transactions |
||||||||||||
Return and cancellation of common stock |
$ | — | $ | 990 | $ | 900 | ||||||
Forgiveness of debt |
$ | — | $ | — | $ | 308,831 | ||||||
6
| 1. | Basis of Presentation and Organization | |
| The accompanying unaudited financial statements of QuikByte Software, Inc. (the “Company” or “QuikByte”) are presented in accordance with the requirements for Form 10-Q and Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (all of which were of a normal recurring nature) considered necessary to fairly present the financial position, results of operations and cash flows of the Company on a consistent basis, have been made. | ||
| These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company’s annual financial statements for the year ended December 31, 2007. Operating results for the six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. | ||
| The Company recommends that the accompanying financial statements for the interim period be read in conjunction with the financial statements and notes for the year ended December 31, 2007 included in the Company’s Annual Report on Form 10-KSB as filed on March 31, 2008. | ||
| Organization and Business | ||
| QuikByte was incorporated on January 26, 1989 under the laws of the State of Colorado, for the purpose of developing and marketing computer software. The Company was primarily engaged in developing Internet commerce solutions and products for businesses and consumers, and raising equity funding. The Company ceased operations in 1992 and has since remained inactive. | ||
| During the first quarter of fiscal year 2007, a change in control of the Company occurred that resulted in the resignation of the previously existing officers and directors of the Company (see Note 3). During the third quarter of fiscal year 2008, a second change in control of the Company occurred that also resulted in the resignation of the then-existing officers and directors of the Company (see Note 3). | ||
| Following the change in control during the first quarter of fiscal year 2007, the Company’s principal business objective for the remainder of the fiscal year and beyond such time has been to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. | ||
| Basis of Presentation | ||
| To date, the Company has not earned revenues from its principle operations and as a result is currently in the development stage as defined by Statement of Financial Accounting Standards No. 7, Accounting and Reporting by Development Stage Enterprises (“SFAS No. 7”). | ||
| Going Concern | ||
| The Company currently has no source of operating revenue, and has only limited working capital with which to pursue its business plan, which contemplates the completion of a business combination with an operating company. The amount of capital required to sustain operations until the successful completion of a business combination is subject to future events and uncertainties. It may be necessary for the Company to secure additional working capital through loans or sales of common stock, and there can be no assurance that such funding will be available in the future. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. |
7
| The accompanying financial statements have been presented on the basis of the continuation of the Company as a going concern and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | ||
| 2. | Summary of Significant Accounting Policies | |
| Use of Estimates | ||
| The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as well as the reported amounts of revenues and expenses. Actual results could differ from these estimates. | ||
| Income Taxes | ||
| The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS No. 109”), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. The tax provision shown on the accompanying statement of operations is zero since the deferred tax asset generated from net operating losses is offset in its entirety by a valuation allowance. State minimum taxes are expensed as incurred. | ||
| Cash and Cash Equivalents | ||
| Cash and cash equivalents, if any, include all highly liquid instruments with an original maturity of six months or less at the date of purchase. | ||
| Fair Value of Financial Instruments | ||
| The Company’s financial instruments include accounts payable and accrued expenses. The carrying amounts of financial instruments approximate fair value due to their short maturities. | ||
| Net Loss Per Share | ||
| Basic loss per share (EPS) is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company currently has no dilutive securities and as such, basic and diluted loss per share are the same for all periods presented. | ||
| Comprehensive Loss | ||
| Comprehensive loss is defined as all changes in stockholders’ equity (deficit), exclusive of transactions with owners, such as capital investments. Comprehensive loss includes net loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. For the six months ended June 30, 2008 and for the cumulative period from inception (January 26, 1989) to June 30, 2008, the Company’s comprehensive loss was the same as its net loss. |
8
| Recently Issued Accounting Pronouncements | ||
| In December 2007, the FASB issued SFAS No. 141 (revised December 2007), “Business Combinations” (“SFAS 141R”), which replaces FASB Statement No. 141, “Business Combinations.” This statement requires an acquirer to recognize identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their full fair values at that date, with limited exceptions. Assets and liabilities assumed that arise from contractual contingencies as of the acquisition date must also be measured at their acquisition-date full fair values. SFAS 141R requires the acquirer to recognize goodwill as of the acquisition date, and in the case of a bargain purchase business combination, the acquirer shall recognize a gain. Acquisition-related costs are to be expensed in the periods in which the costs are incurred and the services are received. Additional presentation and disclosure requirements have also been established to enable financial statement users to evaluate and understand the nature and financial effects of business combinations. SFAS 141R is to be applied prospectively for acquisition dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. | ||
| In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 requires non-controlling interests to be treated as a separate component of equity, rather than a liability or other item outside of equity. This statement also requires the amount of consolidated net income attributable to the parent and the non-controlling interest to be clearly identified and presented on the face of the income statement. Changes in a parent’s ownership interest, as long as the parent retains a controlling financial interest, must be accounted for as equity transactions, and should a parent cease to have a controlling financial interest, SFAS 160 requires the parent to recognize a gain or loss in net income. Expanded disclosures in the consolidated financial statements are required by this statement and must clearly identify and distinguish between the interest of the parent’s owners and the interests of the non-controlling owners of a subsidiary. SFAS 160 is to be applied prospectively for fiscal years beginning on or after December 15, 2008, with the exception of presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. | ||
| In March 2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities—An Amendment of FASB Statement No. 133.” (“SFAS 161”). SFAS 161 establishes the disclosure requirements for derivative instruments and for hedging activities with the intent to provide financial statement users with an enhanced understanding of the entity’s use of derivative instruments, the accounting of derivative instruments and related hedged items under Statement 133 and its related interpretations, and the effects of these instruments on the entity’s financial position, financial performance, and cash flows. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008. We do not expect its adoption will have a material impact on our financial position, results of operations or cash flows. | ||
| In April 2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 142-3, “Determination of the Useful Life of Intangible Assets". This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R, and other GAAP. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the impact of SFAS FSP 142-3, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows. | ||
| In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. This statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board’s amendments to AU section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is currently evaluating the impact of SFAS 162, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows. |
9
| In May 2008, the Financial Accounting Standards Board issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts — An interpretation of FASB Statement No. 60” (“SFAS 163”). SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance enterprise’s risk-management activities. SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material effect on the Company’s financial statements. | ||
| In March 2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities—An Amendment of FASB Statement No. 133.” (“SFAS 161”). SFAS 161 establishes the disclosure requirements for derivative instruments and for hedging activities with the intent to provide financial statement users with an enhanced understanding of the entity’s use of derivative instruments, the accounting of derivative instruments and related hedged items under Statement 133 and its related interpretations, and the effects of these instruments on the entity’s financial position, financial performance, and cash flows. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008. We do not expect its adoption will have a material impact on our financial position, results of operations or cash flows. | ||
| Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption. | ||
| 3. | Stock Purchase Agreements and Changes of Control | |
| On March 23, 2007, KI Equity Partners V, LLC, a Delaware limited liability company (“KI Equity”), acquired control of the Company under the terms of that certain Securities Purchase Agreement, dated March 2, 2007 (the “2007 Agreement”), between the Company and KI Equity (the “2007 Transaction”). Pursuant to the terms of the 2007 Agreement, the Company agreed to sell to KI Equity, and KI Equity agreed to purchase from the Company, 60,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), for a purchase price of $600,000 or $0.01 per share. Prior to the closing of the 2007 Transaction, the Company was controlled by Ponce Acquisition, LLC, a Colorado limited liability company (“Ponce Acquisition”). To the Company’s knowledge, the source of funds for the 2007 Transaction was from the working capital of KI Equity. The proceeds from this sale were used to settle a variety of the Company’s pre-existing liabilities. | ||
| Effective as of the closing of the 2007 Transaction, in accordance with the terms of the 2007 Agreement, the then-existing officers and directors of the Company resigned, and Mr. Kevin R. Keating (“Keating”) was appointed the Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer of the Company and a member of the board of directors of the Company (the “Board”), and Jeff L. Andrews and Margie L. Blackwell were appointed as members of the Board. | ||
| On June 2, 2008, KI Equity, at the time the largest holder of the Company’s Common Stock, and Keating, who at the time was the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and a Director, entered into a Stock Purchase Agreement, as amended (the “KI/Keating Purchase Agreement”), with Mr. Glenn L. Halpryn, as agent for certain investors in the Company (the “Investors”), pursuant to which KI Equity and Keating agreed to sell to the Investors, and the Investors agreed to purchase from KI Equity and Keating, an aggregate of 69,100,000 shares of Common Stock (the “KI/Keating Shares”), for an aggregate purchase price of $926,273.46, or approximately $0.0134 per share. |
10
| Also on June 2, 2008, the Investors entered into a Stock Purchase Agreement, as amended (the “Garisch Purchase Agreement”), with Garisch Financial, Inc., an Illinois corporation (“Garisch”), pursuant to which Garisch agreed to sell to the Investors, and the Investors agreed to purchase from Garisch, 5,500,000 shares of Common Stock (the “Garisch Shares”), for an aggregate purchase price of $73,726.54, or approximately $0.0134 per share. | ||
| The closings of the transactions (the “Change of Control Transaction”) contemplated by the KI/Keating Purchase Agreement and the Garisch Purchase Agreement (the “Closings”) occurred simultaneously on July 7, 2008. At the time of the Closings, the KI/Keating Shares represented approximately 87% of the issued and outstanding shares of the Common Stock of the Company, and the Garisch Shares represented approximately 6.9% of the issued and outstanding shares of the Common Stock of the Company. To the Company’s knowledge, the source of the purchase price for the KI/Keating Shares and the Garisch Shares was from the personal funds and the working capital of the Investors. | ||
| Pursuant to the terms of the KI/Keating Purchase Agreement and effective upon the Closings, Keating resigned from his positions as the Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer of the Company, and Keating, Jeff Andrews and Margie Blackwell (the “Existing Directors”) resigned from their positions as the directors of the Company. Also pursuant to the terms of the KI/Keating Purchase Agreement, the Existing Directors (i) amended the Bylaws of the Company in order to increase the size of the Board from three directors to five directors, (ii) appointed Mr. Glenn L. Halpryn, Mr. Alan Jay Weisberg, Mr. Noah M. Silver, Dr. Curtis Lockshin and Mr. Ronald Stein as the directors of the Company, effective upon the Closings, and (iii) appointed Mr. Glenn L. Halpryn to serve as the President and Chief Executive Officer of the Company, effective upon the Closings. Subsequent to the Closings, the New Directors appointed Mr. Noah M. Silver as the Vice President, Secretary and Treasurer of the Company and Mr. Alan Jay Weisberg as the Chief Financial and Accounting Officer of the Company. | ||
| 4. | Stockholders’ Equity (Deficit) | |
| On March 2, 2007, the Company amended its Articles of Incorporation to reduce its authorized capital stock. The amendment reduced the authorized Common Stock from 500,000,000 shares, with a par value of $0.0001 per share, to 250,000,000 shares, with a par value of $0.0001 per share. The amendment also reduced the authorized preferred stock from 100,000,000 shares, with a par value of $0.0001 per share, to 2,000,000 shares, with a par value of $0.0001 per share. | ||
| The amendment also provided for a 1-for-20 reverse stock split (“Reverse Split”) of the Company’s Common Stock outstanding on March 16, 2007. No fractional shares of Common Stock or scrip certificate were issued to the holders of the shares of Common Stock by reason of the foregoing Reverse Split. Any fractions resulting from the Reverse Split computation were rounded up to the next whole share, resulting in the issuance of 9 additional shares of Common Stock on a post Reverse Split basis. The total number of shares of Common Stock that the Company is authorized to issue remains 250,000,000 shares after the Reverse Split. | ||
| As of June 30, 2008, there were 79,302,460 shares of Common Stock issued and outstanding (on a post-Reverse Split basis) and zero shares of preferred stock issued and outstanding. | ||
| On January 31, 2007, the Company issued 7,500,000 shares of its Common Stock (on a post-Reverse Split basis) to Ponce Acquisition for aggregate consideration $15,000, or $0.002 per share. The proceeds from this issuance were used to pay a portion of the costs to bring the Company current in its reporting obligations under the Exchange Act. |
11
| On March 21, 2007, Ponce Acquisition cancelled and returned to QuikByte an aggregate of 7,450,000 shares of Common Stock (on a post-Reverse Split basis). The Company accounted for the return and cancellation of these shares as a reduction to common stock at par value, with a corresponding increase to additional paid-in capital. | ||
| On March 21, 2007, Bruno Koch, J.B. Heidbrecht and Mark Nixon, each of whom were former executive officers and directors of the Company for all or a portion of the period commencing January 26, 1989, and ending on or about December 31, 1991 cancelled and returned to QuikByte an aggregate of 2,450,000 shares of Common Stock (on a post-Reverse Split basis). The Company accounted for the return and cancellation of these shares as a reduction to common stock at par value, with a corresponding increase to additional paid-in capital. | ||
| On March 21, 2007, the Company issued 60,000,000 shares of its Common Stock to KI Equity for aggregate consideration of $600,000, or $0.01 per share. The proceeds from this sale were used to settle a variety of pre-existing liabilities of the Company. | ||
| On March 26, 2007, the Company issued 7,500,000 shares of its Common Stock to KI Equity for aggregate consideration of $75,000, or $0.01 per share. The proceeds from this sale are to be used for working capital to pay expenses to maintain the reporting status of the Company. | ||
| On March 26, 2007, the Company issued 1,600,000 shares of its Common Stock to Keating, for services rendered to the Company valued at $16,000, or $0.01 per share. | ||
| On March 26, 2007, the Company also issued 5,500,000 shares of its Common Stock to Garisch for consulting services rendered to the Company valued at $55,000, or $0.01 per share. | ||
| The shares of Common Stock issued to KI Equity, Kevin R. Keating and Garisch in March of 2007 were issued under an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). As such, the shares of Common Stock issued to KI Equity, Kevin R. Keating and Garisch are restricted shares. The Company also granted demand and piggyback registration rights to KI Equity, Keating and Garisch with respect to the above shares. | ||
| In conjunction with the Stock Purchase Agreement and Change of Control Transaction that was finalized on July 7, 2008 (see Note 3), the Company terminated the registration rights and related agreements that were initially granted to KI Equity, Keating and Garisch in March of 2007. | ||
| 5. | Related Party Transactions | |
| Effective March 26, 2007, the Company entered into a management agreement (“Management Agreement”) with Vero Management, L.L.C., a Delaware limited liability company (“Vero”) under which Vero agreed to provide a broad range of managerial and administrative services to the Company including, but not limited to, assistance in the preparation and maintenance of the Company’s financial books and records, the filing of various reports with the appropriate regulatory agencies as are required by State and Federal rules and regulations, the administration of matters relating to the Company’s shareholders including responding to various information requests from shareholders as well as the preparation and distribution to shareholders of relevant Company materials, and to provide office space, corporate identity, telephone and fax services, mailing, postage and courier services for a fixed fee of $2,000 per month, for an initial period of twelve months. At the end of the initial twelve month term, the agreement was to continue to remain in effect until terminated in writing by either party. Effective July 1, 2007, the Management Agreement was amended to reduce the monthly fixed fee to $1,000 per month. |
12
| Keating owns and controls Vero and was previously an officer and director of the Company prior to his resignation from such positions on July 7, 2008 in conjunction with the Change of Control Transaction as discussed in Note 3. Additionally, in conjunction with the KI/Keating Agreement and Change in Control Transaction that was finalized on July 7, 2008, the Company terminated the Management Agreement with Vero. | ||
| 6. | Subsequent Events | |
| On July 7, 2008, after the closing of the Change of Control Transaction as discussed in Note 3, the Company issued 31,437,000 shares of its Common Stock for an aggregate offering price of $562,500. There were no underwriting discounts or commissions associated with the transaction and the shares of Common Stock were issued pursuant to the private placement exemption provided by Section 4(2) of the Securities Act and Rule 506 promulgated thereunder. As of July 7, 2008, after giving effect to the issuance of the 31,437,000 shares of Common Stock as discussed above, a total of 110,739,460 shares of the Company’s Common Stock were issued and outstanding. |
13
14
| (i) | filing of Exchange Act reports, and | ||
| (ii) | costs relating to consummating an acquisition. |
15
16
17
| 31.1 | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification by CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification by CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
18
| QUIKBYTE SOFTWARE, INC. |
||||
| Date: Aug 14, 2008 | By: | /s/ Glenn L. Halpryn | ||
| Name: | Glenn L. Halpryn | |||
| Title: | Chief Executive Officer | |||
| Date: Aug 14, 2008 | By: | /s/ Alan Jay Weisberg | ||
| Name: | Alan Jay Weisberg | |||
| Title: | Chief Financial and Accounting Officer | |||
19